The Government of Canada has been hard at work putting together support programs for small businesses that have been affected by COVID. The BCAP program constitutes several initiatives by the Government in working with two financial Crown corporations: Export Development Canada (EDC) and Business Development Bank of Canada (BDC).
The BCAP program includes the Canadian Emergency Business Account (CEBA) which you can read more about here [Blog link]. There are also two other initiatives included in BCAP: EDC’s Loan Guarantee and BDC’s Co-Lending.
EDC’s Loan Guarantees for Small and Medium Enterprises
In this initiative, the EDC is able to provide large loan guarantees to assist businesses in obtaining financing. Major Canadian financial institutions are now able to issue operating credit and cash flow term loans of up to $6.25 Million to their existing clients with 80% guaranteed by EDC.
This funding can only be spent on operational expenses much like the CEBA program. Expenses such as dividend payouts, shareholder loans, bonuses, stock buyback, option issuance, increases to executive compensation or repayment/refinancing other debt are all prohibited expenses for this financing.
To find out more about your eligibility and other information relevant to your circumstances, contact your financial institution directly.
BDC’s Co-Lending for Small and Medium Enterprises
The third initiative that is included in the BCAP program, is a partnership with BDC to provide term loans for operational and liquidity needs of small and medium businesses. The funds from this initiative can be used to service interest payments on existing debts.
The program is divided into three segments based on pre-COVID revenues which will determine the size of the loan that a business is eligible for:
- Revenues of less than $1 million, may borrow up to $312,500
- Revenues between $1 million and $50 million, may borrower up to $3.125 million
- Revenues of more than $50 million, may borrow 6.25 million
The BDC loans would start as interest-only loans for the first 12 months, with a 10-year repayment period.
To find out more about your eligibility and other information relevant to your circumstances, contact your financial institution directly.
Frequently Asked Questions
What are the eligibility requirements for the initiatives in BCAP?
The first initiative, CEBA, has a particular set of requirements a business must meet in order to be eligible. You can read more about that here.
The second and third initiatives by the BDC and EDC are more complex and require direct communication with your financial institution to learn more about the individual stipulations. In general, if your business was performing well pre-COVID and was not in arrears in any debt facility, you may be eligible for the BDC and EDC initiatives.
